Creditworthiness Standards Replace Credit Ratings

This is the first in a series of three alerts on investment securities and risk-based capital requirements under Dodd Frank.

On November 18, 2011, the Office of the Comptroller of the Currency (the "OCC") released a notice of proposed rulemaking¹ on Alternatives to the Use of External Credit Ratings in the Regulations of the OCC (the "Credit Ratings Alternatives") along with proposed Guidance on Due Diligence Requirements in Determining Whether Investment Securities² are Eligible for Investment (the "Due Diligence Requirements"). The proposed rulemaking³ would remove the reference to credit ratings⁴ from three⁵ of the OCC's regulations and would replace these references with a new creditworthiness standard.